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Pension spreading |
See Also
Adjustment of profit | Pension adjustments
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
This schedule allows the user to spread pension relief into future periods.
Multiple copies of this schedule may be developed from the Pension Adjustments schedule.
The relevant pension contribution will flow to the Pension Adjustments schedule on the ?Contributions in current period? row.
There is one row for each period and contribution, together with the contribution of the immediately preceding period. Further rows can be inserted as required.
Period end
The user should enter the period end in which the relevant pension contribution was paid.
Contribution for period
The user is required to enter the contribution relevant for the particular period. The software identifies the payments falling in the current period from the period ends entered and checks the amount back to the Pension Adjustments schedule.
Excepted purpose contributions
If the contribution entered includes any excepted purpose contributions they should be entered in this column. The current period amounts will be included in the adjustment and deducted in full.
Prior period contributions
The prior period contributions are required to test whether the current contribution exceeds the threshold for spreading.
Show AP columns (for periods of different lengths)?
This selector should be used if the length of the current and the previous chargeable periods are not the same, i.e. if there has been a change of accounting date.
Where the period lengths are different you should enter the start and end dates for the current period and the immediately preceding period. The software will calculate the factor to apply in deciding whether there is a ?relevant excess?.
Where the lengths of the chargeable periods are different a factor is calculated for the previous chargeable period using the formula
DCCP/DPCP
Where:
DCCP = number of days in the current chargeable period, and
DPCP = number of days in the previous chargeable period.
This factor is then applied to the amount of contributions paid in the previous chargeable period, in calculating the relevant excess.
Current period deduction
The software calculates the deduction available in the current period that is not subject to spreading. This is posted to the Pension Adjustments schedule.
Relevant Excess
The relevant contributions for the current and the previous chargeable periods are compared to calculate if there has been an excess, and if so how much. This amount will take into account if there has been a change in the length of chargeable periods.
If the amount in the current period is more than 210% of the amount in the previous period, there is an excess that may need to be spread.
The amount of the excess is the amount of the contribution in the current chargeable period that is more than 110% of the contributions paid in the previous period.
Periods of Spread
The number of period over which tax relief will be spread depends on the absolute size of the ?relevant excess?. The ?relevant excess? and the periods for spreading used by the software are tabulated at the bottom of the schedule.
Excess bf
On rolling forward to a new period this column will be populated with the remaining tax relief to be spread. This will continue until all of the ?relevant excess? has been relieved.
Contributions not spread
This is the contribution that has tax relief, but will not be spread, other than the current period deduction explained above.
On cessation of business this amount may either include amounts relieved under s198(3)(a) FA 2004, or amounts carried back under s198(3)(b) FA 2004. A disclosure note explaining this will be displayed at the bottom of the schedule.
Excess cf
This column will contain the remaining tax relief to be spread over future chargeable periods. When all tax relief has been spread, the row will not carry forward in future years.
Cessation of business rules apply to this period?
There are special rules concerning the spreading of tax relief when an employer ceases business.
If an employer ceases to carry on business either:
? in the chargeable period in which the contribution that triggers spreading of tax relief was paid or,
? in a later chargeable period into which relief on relevant excess contributions have been spread
the spreading of tax relief would mean that the employer does not get full tax relief on the contribution before it ceased business.
To mark that the business has ceased in either this period, or a future chargeable period, but the cessation rules apply to this period, select this option to display the relevant cessation columns.
C/back relief under s198(3)(b) FA 2004 current and previous period
On cessation of business the employer can choose to treat the unrelieved balance as if it had been carried back and paid in equal daily instalments either:
i. in the period the business ceased; or
ii. in the period beginning with the current chargeable period and ending on the day the business ceased.
Relieve contributions in period under s198(3)(a) FA 2004?
On cessation of business the employer can choose to allow the unrelieved balance of any relevant excess contributions against their profits in the chargeable period when the employer ceases business, by selecting this option. The flag should be used if relief is required entirely in the current period.
The remaining tax relief will then be transferred to the ?Contributions not spread? column and the excess cf will then be zero.
If relief is required in part in the current period you should enter the amount of relief in the column ?C/back relief current period?. This amount will appear as ?Contributions not spread? and will be relieved via the Pension Adjustments schedule.
Amounts relieved in prior periods should be entered in the column ?C/back relief previous period?. These amounts will also need to be entered in the relevant prior period computation.
The schedule has no standard sub-schedules.
On carry forward, the name of the pension scheme, the period end, contribution for period end, excepted contribution, previous period contribution, relevant excess, periods of spread and if relevant poa/AP start and end dates. The excess brought forward will be populated with the excess carried forward from the prior year.
© 2009 Thomson Reuters.